Smartsheet is a platform provider offering cloud based collaboration, work management, and automated workflow software.
Despite being a cash burning company (FCF negative), Smartsheet has been unfairly punished after earnings release and is thus a value play.
Smartsheet has collapsed over 20% after releasing earnings due to missing billings expectations and withdrawing guidance for the year. However, Smartsheet now represents excellent value given that revenue grew 52% YoY. The concern that Smartsheet missed on billings does not justify the huge loss in price, especially since the CEO and CFO confirmed during the earnings call that this is due to Smartsheet working with customers to change to a quarterly or flexible billing schedule given the uncertainty surrounding the COVID situation.
Overall, COVID presents a tough situation for their SMB (small and medium business) segments and industries such as retail with churn at a higher rate than usual. In addition, many companies are holding off on products like Smartsheet until the uncertainty surrounding COVID clears up. Still, even with these headwinds Smartsheet believes that COVID has benefited Smartsheet in raising awareness about the need for such a platform and the benefits of using a collaboration software system, especially in times like this. They affirmed during the earnings call that key metrics such as monthly trials and the pipeline generated by sales teams remains strong, especially with the predicted shift to online work and work from home. Thus, the underlying demand and necessity for Smartsheet's product remains there.
That is, if you can stomach a company operating at a loss as "value." Or maybe I'm just out of my mind. Thoughts?
Read more about the earnings call here :